High Finance and Low Crimes
I learned a couple of
curious things when I worked at IBM’s Wall Street Data Center. One was that my friend, Curtis Gadsen liked mayo
sandwiches and fleecy-legged girls. The other was my friend Ray Parchen
could be fooled because he was too good at his job as a mainframe
computer operator.
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| IBM 360
computer room |
Like an old-time
stoker fed the fires of furnaces and steam engines, an IBM operator stuffed the huge machines with programs and data. Very good
operators could act and react instantly without thought, confident in
their experience and skills, mounting discs and responding to messages
as they'd done ten thousand times before, giving them no more thought
than donning their underwear in the morning. The keyword was efficiency.
Unintimidated by hulking computers the public suspected were semi-sentient, Ray worked quickly and accurately,
and for that reason, he held down the first shift position. For him, I
wrote a silly little psychological program that worked only with the best.
Amidst weighty programs queued for the giants of Wall Street, I slipped in the prank while a dozen employees gathered outside
the computer room’s glass wall, waiting for the small program to do its
thing: It made discs chatter, tapes whirr, lights blink, and the data center rumble as if
Colossus was taking over the world.
We watched Ray bend over the console, reading the first mundane message:
05483A
Press ENTER.
Ray pressed the ENTER key. The machine responded with another message:
05483A
Press ENTER hard.
A few of us watched from outside the computer room as Ray hit ENTER
again. The machine came back with:
05483A
Press ENTER harder.
Ray punched the ENTER key, and a couple of the girls giggled. The
computer responded with:
05483A
Press ENTER even harder.
Ray smacked the key hard, very hard. The machine responded with one
last message;
05483I
Did it occur to you I can’t tell
how hard you press ENTER?
Ray looked up with a red-faced grin and spotted us chuckling. Afterwards, he joined us for a drink where we argued why the program fooled some and not others.
Of course he
knew pressure couldn't be detected, but he hadn't engaged his knowledge hidden behind the wall of his expertise. I would discover this common quirk could be exploited, as Simon Templar might say, “by the ungodly.” As noted in the article about kiting, confidence men take advantage of confidence.
Over the next few days, we tried our little joke on other operators and observed this interesting fact: Only the best fell for the stupid
little prank. Novice operators stopped, studied the messages, and tried to look them up.
Ray and the other top operators reacted immediately and without
thinking. Self-assured of their abilities, they acted instinctively by
rote.
Less experienced operators questioned everything, including themselves.
We caught more than one systems engineer trying to look up the bogus
message number in the reference manuals and they sometimes called for
help. That spoiled the little program.
Lesson: Sometimes it’s easiest to fool the most experienced.
There’s a reason I tell this story. It leads to how I became sort of a
detective, a digital
Dashiel of a
Continental
Op.
Over the next few weeks, I'll talk about an accidental career as a
investigator in a field yet to be invented, that of
computer forensics.
I reveled in the chase, but my career often hung in the balance under
threat of firing, even blackballing. Often the only reward was
termination but hey, that happens to all the best private eyes.
Background Noise
An early case exploded with little of my own involvement, or, perhaps
because of my lack of involvement. The players:
Walston & Co, the
nations third largest brokerage house, and
Arthur Anderson, the biggest
of the Big Eight accounting firms until participation in the
Enron scandal brought about its demise. Anderson had
dirtied its manicured
fingers long before Enron arrived on the scene.
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| Wall Street and Financial District |
Search the internet for Walston & Co and its
Wikipedia
entry merely
reads "(Walston) was acquired by Ross Perot following pension account
fraud and then merged it with Dupont, which had found itself in
financial difficulties." Here's the story behind the story.
Despite the Wikipedia gloss-over, the wheels of merger with F.I. DuPont
began turning before revelation of Walston’s fraud. Fifteen million in
securities had vanished from DuPont’s accounts. The White House grew
nervous. Wall Street threw up its collective hands, Oh woe, what to do,
what to do?
A Texan rode into town,
Ross Perot. He’d bulldozed through
the insurance industry (an intriguing inside tale of its own) and
encouraged by
Felix G. Rohatyn, he made his move on Wall Street.
For an
initial $30 million, the impossibly old, impossibly young
forty-year-old Napoleonic Perot acquired control of one of the Street’s most
prestigious houses. (N.B: Regrettably,
Time Magazine articles referenced herein require a subscription.)
At the time, that seemed background noise for me, a full-time employee
and a full-time student, living paycheck to
paycheck and barely sleeping. I couldn't guess how it would alter my career.
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Trinity Church framed
by Wall Street |
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Crime on the Street
In the Financial District, denizens simply call Wall Street 'the
Street'. Philosophical sorts read a moral into its long, narrow confines,
noting it begins at a
church and ends at a river: When times get tough,
in depression or desperation, one may choose salvation or suicide.
The Street fosters its own culture. On the one hand, a man’s word is
his bond– multimillion dollar transactions hinge on verbal promises. On the
other hand, huge regulatory holes allow brokerage houses to commit the
sleight-of-hand that brought the economy to its knees ten years ago. We
can’t say we weren’t
forewarned,
but in the heady days of deregulation,
greed and giddiness carried the day. We never seem to learn industries
cannot police themselves.
One of the first observations of the Street is that the market's moody–
it reacts, even overreacts to political news of the day. But I stumbled
upon other emotions, which included surprisingly little hanky-panky. A
few notes from the era:
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| Miss Francine Gottfried |
- Wall Street can be a mad marketplace when the economy's in a
lull. Late one summer, a sweet keypuncher named Francine Gottfried
caused a sensation with the mostly male lunch crowd as her 43-23-37
figure bounced down the steps of Chemical Bank & Trust. For a few
days, a sort of silly mating season reigned and then, as so often
happens, her 15(0) minutes of fame were up.
- Once, as I strolled with my boss down the street, we encountered
a beggerman squatting on his flattened cardboard. My boss stopped and
chatted with this derelict before moving on. I didn't say anything but
he confessed: The homeless man once worked as a broker, what Wall
Street called an account executive or AE. When my boss and the
man’s wife carried on an affair (and subsequently married), this man– the husband–
collapsed in despair. He now lived– literally– on the Street.
- During the 'Hard Hat Riots' (then called the Wall
Street Riots), I picked my way through roving
construction workers from the rising World Trade Center left by police to run wild,
bashing kids protesting the war in Vietnam. On my way to school as police idled, I
helped a girl and her boyfriend bloodied by a musclebound thug. It was no
contest: the canyon-like Street corralled the teens, leaving them easy pickings by hardhats with pipes and wrenches. That wasn’t one of Wall Street’s prouder moments. Hard-hats went on to attack the city's mayor's office, smashing the face of one of his aides.
The Young and Restless
A precocious if unaware teen, I worked as an IBM shift supervisor in
their Wall Street Data Center, Number 11 Broadway. I had the greatest
boss, a pretty blonde named Judy Kane. We boys loved her; the girls–
not so much.
And I loved software, the machine-level bits and bytes and Boolean
stuff. A teenage mad scientist, I found computers a giant puzzle, one I learned to solve and control. It was a battle of wills, me versus machine, immersive therapy for a broken heart (but that's another story). I'd come to know these Daedalus creatures like a mother knows her own children; better even, I'd learned their DNA.
A sales rep, Herb Whiteman, discovered I spent weekends camped in the
computer room, teaching myself to program the huge monsters, then
catnapping on the couch as the computers blinked and toiled, compiling
my routines. Herb asked if I’d be interested in joining a three-man
team that would change Wall Street and put video terminals on broker’s
desks.
Argus
Research, the parent company, would double my IBM salary.
The company gave us secretaries and an entire floor of offices, no
expense spared. Unfortunately Argus, in the business of
prognostication, shortly deduced the economy teetered on the brink of recession
and pulled the plug. Not long after Walston & Company hired me as
their fancy-pants systems programmer offering tuition reimbursement as
part of my
hiring package. Me! I was just a kid from nowhere.
Thus began my introduction to low crimes and high finance.
Stay tuned for
more next week, Wall Street's big boys and big crimes.
